The main objective of a company is to earn profit. Profit is both a means and end to the company. Therefore, profitability shows the overall efficiency of the company. Profitability ratios are the measure of its overall efficiency. Generally, profitability ratios can be calculated in term of company's sale, investments and earnings and dividends. The following are the main types of profitability ratios.
1.Profitability in relation to sales
*Gross profit margin
*Net profit margin
2. Profitability in relation to investment
*Return on assets (ROA)
*Return on shareholders equity (ROSE)
*Return on equity shareholders fund
*Return on capital employed
3. Profitability in terms of earnings and dividends
* Earning per share (EPS)
* Dividend per share (DPS)
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